Arthur J. Villasanta – Fourth Estate Contributor
London, United Kingdom (4E) – HSBC Holdings plc, the largest bank in Europe, reported encouraging profits and revenues in the first half of the year, mainly because of its strong Asian operations. Asia accounted for nearly 90 percent of the group’s profit for the first half.
The London-based bank said revenues improved four percent year-on-year to $27.3 billion in the first half. Profit before tax rose by 4.6 percent to $10.7 billion from $10.2 billion in the first half of 2017. This figures compares favorably to analysts’ estimates of $10.38 billion. Shares of HSBC on Hong Kong’s Hang Seng Index rose 0.83 percent after the news became public about the bank’s uplifting performance.
HSBC attributed the welcome numbers to its strong performance in Asia despite Donald’s Trump’s trade war against China that ignited in March and worsened in July. The trade war directed mainly against China will worsen further in September when the United States implements a new round of punitive tariffs against Chinese goods.
HSBC CEO John Flint said the H1 results are in line with the bank’s expectations. “This is creating room to invest while maintaining our commitment to full-year positive adjusted jaws,” said Flint in a statement accompanying the results announcement.
In June, Flint said HSBC plans to spend an additional $15 billion to $17 billion on areas, including “growth and technology,” between 2018 and 2020. This move will increase the bank’s cost base by “low-to-mid-single digit percentages each year until the end of 2020,” said Flint. HSBC has been restructuring for years in a concerted bid to grow its business once more.
HSBC said it remains “cautiously optimistic” about global growth for the rest of the year despite worsening trade tensions. It will continue focusing on Asia. The bank noted that “the fundamentals of Asia remain strong despite rising concerns around the future of international trade and protectionism.”
Along with a much better revenue and profit picture came a rise in operating expenses, which rose to $17.5 billion in the first half from $16.4 billion in the same period in 2017. A spike in the bank’s expenses triggered a drop in profits during the first quarter.
HSBC is the world’s seventh-largest bank by total assets. It’s the largest in Europe with total assets of $2.37 trillion as of December 2016.
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